Report: BitTorrent Firing 20% Of Workforce

BitTorrent, the company that's trying to make a business out of the popular file-sharing technology, is firing 12 of its 55 employees, Valleywag reports. Owen Thomas thinks the layoffs stem from a failed deal to sell BitTorrent's online media store to Best Buy (BBY); he thinks that deal fell through because of a recent FCC ruling on file-sharing.

We're lost on the second part - the FCC recently punished Comcast (very lightly) for choking p2p traffic, but that should have encouraged a deal, not killed one - but Owen promises to explain all soon. Hurry up, Owen!

In the meantime, here's some useful context about BitTorrent's odd history: The company was originally supposed to offer sanctioned P2P movie downloads using the same technology used by millions of pirates. But that never really took off, and by this spring, CEO Doug Walker was describing a new strategy: It would start competing with content delivery giants Akamai (AKAM) and Limelight (LLNW) to help media companies move their files; it was also going to try to make money via licensing deals with electronics companies.

Meanwhile, the retail store, which had very little in the way of mainstream content, was going to be "repositioned":

Walker: We're actually going to reposition our store. The two areas that we're going to focus the business are the 'DNA' service, which is a service for the distribution of large rich media files in a secure, private network environment. The second is a new area for us which we call 'BitTorrent Certified' -- an ability to use BitTorrent technology on new IP-enabled consumer devices. So routers, network attached storage devices, DVRs, television sets.

So what you'll see happening with the store: We'll look at that underlying technology that we've developed over the past several years and invested heavily in, and we'll look at ways to use that underlying technology to actually connect those two groups and create value for both of them. I think that's the way you'll see more value accrue to a company like ours other than strictly being a download or streaming video store.

SAI: So is the store going away?

Walker: It's possible we'll evolve that storefront. We don't have the answer yet.

We're going through the process of evaluating. It could very well be [still around], but look a little bit different. Or we could have refactored it somehow to make a better fit. We're talking to Hollywood. We're talking to the device manufacturers and we're trying to understand what models are going to work between them. Then we'll make a decision from there.